California EDD has payroll advice for cannabis businesses

California has issued some payroll advice for those who have employees in the cannabis business. The Medical Marijuana Regulation and Safety Act became law January 1, 2016, and the Adult Use of Marijuana Act, Proposition 64, was approved by California voters November 8, 2016. It is now legal for individuals to grow and use marijuana for medicinal and recreational use. Regulations governing the sale of cannabis for recreational use may take effect January 1, 2018. The California Employment Development Department (EDD) predicts a substantial increase in cannabis businesses and therefore are reminding those who are considering entering this new emerging market and hiring employees to become familiar with California’s employer tax responsibilities. The EDD helps business owners comply with California’s payroll tax laws and avoid unforeseen tax liabilities. California businesses that hire employees to perform services are required by law to withhold, report, and pay payroll taxes to the EDD. (California Employer, 1st Quarter 2017; Cannabis Industry Businesses, State Employment Payroll Tax Reporting, DE 643, Rev. 1 (5-17).)

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